Translated from the Hebrew original

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1 Translated from the Hebrew original MIGDAL INSURANCE AND FINANCIAL HOLDINGS LTD. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS AT MARCH 31, 2012 UNAUDITED

2 MIGDAL INSURANCE AND FINANCIAL HOLDINGS LTD. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS AT MARCH 31, 2012 UNAUDITED INDEX Page Auditors' Review Report 2 Condensed Interim Consolidated Statements of the Financial Position 3-4 Condensed Interim Consolidated Statements of Income 5 Condensed Interim Consolidated Statements of Comprehensive Income 6 Condensed Interim Consolidated Statements of Changes in Equity 7-9 Condensed Interim Consolidated Statements of Cash Flows Notes to the Condensed Interim Consolidated Financial Statements Appendix to the Interim Consolidated Financial Statements

3 Somekh Chaikin KPMG Millennium Tower 17 Ha'arba'a Street, PO Box 609 Tel Aviv Israel Telephonee Fax Internet Kostt Forer Gabbayy & Kasierer 3 Aminadav St. Tel-Aviv 67067, Israel Tel: 972 (3) Fax: 972 (3) Auditors' Review Report to the Shareholders of Migdal Insurance and Financial Holdings Ltd. Introductionn We have reviewed the accompanying financial information of Migdal Insurance and Financial Holdingss Ltd. and its subsidiaries (hereunder the Group) including the condensed consolidated statement of financial position ass at March 31, 2012 and the related condensed consolidated interim statements of income, comprehensive income, changes in equity and cash flows for the three-month period then ended. The Board of Directors and Management are responsible for the t preparation and presentation of the financial information for this interim period in accordance with w IAS 34, "Interim Financial Reporting" and in accordance with the disclosure requirements prescribed by the Regulator off Insurance pursuant to the Supervision of Financial Services (Insurance) Law, 1981, and they are responsible for the preparation of this interim financial information in accordance with Chapter D of the Securities Regulations (Periodic and Immediate Reports), R 1970, insofar as these regulations apply to insurance companies. Our responsibility is to express a conclusion on this interim i financial informationn based on our review. We did not review the condensed interim financial information of companies treatedd according to o the equity value method the investment in which amounted to NIS 590,144 thousandd as at March 31, 2012, and the t Group s share in their profits amounted to about NIS 17,316 thousand for the three month period then ended. The condensed interim financial information of those companies was reviewed by other auditors whose review reports thereon were furnished to us, and our conclusion, insofar as it relates to amounts emanating from the financial f information of such companies, iss based solely on the said review reports of the other auditors. Scope of review We conductedd our review in accordance with Standard on Review Engagements 1, "Review of Interim Financial Informationn Performed by the Independent Auditor of o the Entity" of the Institute of Certified Public P Accountants in Israel. A review of interim financial information consists off making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conductedd in accordance with generally accepted auditing standards in Israel and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in ann audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review and of the review reports of otherr auditors, nothing has comee to our attention that causess us to believee that the accompanying interim financial information is not prepared, in i all material respects, r in accordance with IAS 34 and in accordance with the disclosure requirements prescribed by the Regulator of Insurance, pursuant to the Supervision of Financial Services (Insurance) Law, In addition to that stated in the preceding paragraph andd on the review report of other auditors, based on our review and on the review reports of other auditors, nothing has come to our attention that causes us too believe that the aforementioned financial information does not comply, in all material respects, with the disclosure requirements of Chapter D of the Securities Regulations (Periodic and Immediate Reports), 1970, insofar as these regulations apply to insurance companies. Without qualifying our above conclusion,, we draw attention to that stated in Note 7 to the financial statementss regarding the exposure to contingent liabilities. Tel-Aviv, Israel May 29, SOMEKH CHAIKIN KOST FORER GABBAY & KASIERERR Member of KPMGG International Member of Ernst & Young Global Certified Public Accountants (Isr.) Certified Public Accountants (Isr.) Joint auditors -2-

4 Condensed Interim Consolidated Statements of Financial Position Migdal Insurance and Financial Holdings Ltd. ASSETS As at As at March 31 December Unaudited Unaudited Audited NIS in thousands NIS in thousands Intangible assets 1,248,440 1,207,585 1,240,774 Deferred tax assets 19,241 16,587 19,361 Deferred acquisition costs 1,571,533 1,500,253 1,539,663 Fixed assets 733, , ,188 Investments in affiliates 591, , ,605 Investment property for yield dependent contracts 3,740,424 3,079,578 3,519,950 Other investment property 527, , ,226 Reinsurance assets 1,130,955 1,218,909 1,181,449 Current tax assets 60,264 79,030 54,207 Debtors and receivables 227, , ,399 Outstanding premiums 588, , ,983 Financial investments for yield dependent contracts 48,282,524 46,921,848 47,411,946 Other financial investments: Quoted debt assets 4,789,946 4,152,578 4,640,308 Unquoted debt assets 20,255,845 19,896,585 20,020,784 Shares 710,972 1,200, ,013 Others 1,298,280 1,178, ,991 Total other financial investments 27,055,043 26,427,923 26,442,096 Cash and cash equivalents for yield dependent contracts 2,498,106 1,033, ,299 Other cash and cash equivalents 1,248,485 1,254,143 1,497,706 Total assets 89,524,018 85,017,253 86,098,852 Total assets for yield dependent contracts in an insurance subsidiary 54,715,991 51,234,836 51,845,273 The accompanying notes are an integral part of the condensed interim consolidated financial statements

5 Condensed Interim Consolidated Statements of Financial Position As at As at March 31 December Unaudited Unaudited Audited NIS in thousands NIS in thousands EQUITY AND LIABILITIES EQUITY Share capital 110, , ,607 Share premium 273, , ,735 Capital reserves 168, ,045 80,002 Retained earnings 4,015,331 3,886,200 4,073,275 Total equity attributed to the Company s shareholders 4,567,813 4,564,587 4,537,619 Non-controlling interests 2,481 1,949 1,803 Total equity 4,570,294 4,566,536 4,539,422 LIABILITIES Liabilities in respect of non-yield dependent insurance and investment contracts 27,504,780 (* 26,567,874 27,277,993 Liabilities in respect of yield dependent insurance and investment contracts 54,378,097 (* 51,099,175 51,388,142 Liabilities in respect of deferred taxes 439, , ,937 Liabilities for employee benefits, net 272, , ,617 Liabilities for current taxes 4,832 8,103 5,601 Creditors and payables 1,385,209 1,516,687 1,449,038 Dividend payable 150, ,000 - Financial liabilities 819, , ,102 Total liabilities 84,953,724 80,450,717 81,559,430 Total equity and liabilities 89,524,018 85,017,253 86,098,852 * Reclassified. See Note 3b. May 29, 2012 Date of approval of Aharon Fogel Yonel Cohen Eran Czerninski the financial statements Chairman of the Board General Manager Chief Financial Officer The accompanying notes are an integral part of the condensed interim consolidated financial statements

6 Condensed Interim Consolidated Statements of Income For the three months ended For the year ended March 31 December Unaudited Audited NIS in thousands NIS in thousands Gross premiums earned 2,333,946 2,201,749 8,892,089 Premiums earned by reinsurers 173, , ,034 Premiums earned on retention 2,160,597 2,033,520 8,173,055 Net investment and finance income 2,645,333 1,055, ,050 Income from management fees 231, , ,958 Income from commissions 88,333 90, ,916 Other income 2,851 2,111 9,255 Total income 5,128,775 3,419,063 10,129,234 Payments and change in liabilities in respect of gross insurance and investment contracts 4,473,039 2,837,778 7,747,124 Reinsurers' share in payments and in change in liabilities in respect of insurance contracts 67, , ,165 Payments and change in liabilities in respect of insurance and investment contracts on retention 4,405,712 2,705,245 7,379,959 Commission, marketing expenses and other acquisition expenses 343, ,872 1,264,223 Administrative and general expenses 252, , ,849 Other expenses 7,213 7,209 26,759 Finance expenses 3,248 2,860 25,152 Total expenses 5,011,832 3,262,534 9,667,942 Share in profits of investees treated according to the equity value method 17,347 13,148 48,614 Income before taxes on income 134, , ,906 Taxes on income 42,893 56, ,198 Income for the period 91, , ,708 Attributed to: Company s shareholders 90, , ,268 Non-controlling interests Income for the period 91, , ,708 Basic and diluted earnings per share attributed to Company s shareholders (in NIS) The accompanying notes are an integral part of the condensed interim consolidated financial statements

7 Condensed Interim Consolidated Statements of Comprehensive Income Migdal Insurance and Financial Holdings Ltd. For the three months ended For the year ended March 31 December Unaudited Audited NIS in thousands NIS in thousands Income for the period 91, , ,708 Other comprehensive income Net change in the fair value of available for sale financial assets recognized in capital reserves 156,837 6,725 (393,398) Net income and losses from the realization of available for sale financial assets recognized in statement of income (34,557) (69,122) (150,338) Impairment in value of available for sale financial assets recognized in statement of income 13,840 6, ,144 Share in other comprehensive income of investee treated according to the equity value method - - (420) Tax benefit (taxes on income) relating to components of other comprehensive income (47,982) 19, ,137 Other comprehensive income (loss) for the period, net of tax 88,138 (36,832) (250,875) Total comprehensive income for the period 179,535 76,814 45,833 Attributed to: Company s shareholders 178,857 76,032 45,393 Non-controlling interests Comprehensive income for the period 179,535 76,814 45,833 The accompanying notes are an integral part of the condensed interim consolidated financial statements

8 Condensed Interim Consolidated Statements of Changes in Equity Attributed to the Company s shareholders Capital Reserve reserves in from respect of investment available revaluation Non- Share Share for sale due to rise Retained controlling Total capital premiums assets to control earnings Total interest capital NIS thousands Balance as at January 1, 2012 (Audited) 110, ,735 73,013 6,989 4,073,275 4,537,619 1,803 4,539,422 Income for the period ,719 90, ,397 Other comprehensive income, net of tax , ,138-88,138 Total comprehensive income ,138-90, , ,535 Benefit in respect of option warrants to employees 1,337 1,337 1,337 Dividend ( 150,000 ) 150,000 ) ( - ( 150,000 ) Balance as at March 31, 2012 (Unaudited) 110, , ,151 6,989 4,015,331 4,567,813 2,481 4,570,294 Attributed to the Company s shareholders Capital Reserve reserves in from respect of investment available revaluation Non- Share Share for sale due to rise Retained controlling Total capital premiums assets to control earnings Total rights capital NIS thousands Balance as at January 1, 2011 (Audited) 110, , ,888 6,989 3,919,656 4,634,875 1,167 4,636,042 Income for the period , , ,646 Other comprehensive loss, net of tax - - ( 36,832 ) ,832 ) ( - ( 36,832 ) Total comprehensive income (loss) - - ( 36,832 ) - 112,864 76, ,814 Benefit in respect of option warrants to employees 3,680 3,680 3,680 Dividend ( 150,000 ) ( 150,000 ) - ( 150,000 ) Balance as at March 31, 2011 (Unaudited) 110, , ,056 6,989 3,886,200 4,564,587 1,949 4,566,536 The accompanying notes are an integral part of the condensed interim consolidated financial statements

9 Condensed Interim Consolidated Statements of Changes in Equity Attributed to Company's shareholders Capital Reserve from reserves in investment respect of revaluation Share available for due to rise Retained Minority Share capital premiums sale assets to control earnings Total interest Total capital NIS thousands Balance as at January 1, , , ,888 6,989 3,919,656 4,634,875 1,167 4,636,042 Income for the period , , ,708 Other comprehensive loss, net of tax - - (250,875) - - (250,875) - (250,875) Total comprehensive income (loss) - - (250,875) - 296,268 45, ,833 Issuance of share capital *) - - Benefit in respect of option warrants to employees ,351 7,351-7,351 Non-controlling interest in respect of business combination Dividend (150,000) (150,000) - (150,000) Balance as at December 31, , ,735 73,013 6,989 4,073,275 4,537,619 1,803 4,539,422 *) Less than NIS thousand The accompanying notes are an integral part of the condensed interim consolidated financial statements

10 Condensed Interim Consolidated Statements of Cash Flows For the three months ended For the year ended March 31 December Unaudited Audited Appendix NIS in thousands NIS in thouands CASH FLOWS FROM A 1,196, , ,122 CURRENT ACTIVITIES CASH FLOWS FROM INVESTMENT ACTIVITIES Investment in investees (134) - (8,608) Cash on acquisition of subsidiary consolidated for the first time D (6,397) - (14,071) Investment in fixed assets (81,352) (42,375) (191,996) Investment in intangible assets (36,999) (39,732) (134,623) Dividend received from investee ,500 Proceeds from the sale of intangible assets - - 2,901 Proceeds from the sale of fixed assets Net cash used in investment activities (124,347) (82,107) (313,440) CASH FLOWS FROM FINANCE ACTIVITIES Realization of employees options into shares - - *) - Receipt of loans from banks and others 499, Settlement of loans from banks and others (19,002) (37,776) (70,157) Change in short term credit from banking institutions and others, net (47,609) 1,853 (17,415) Dividends - - (196,308) Net cash (used in) provided by finance activities 432,424 (35,923) (283,380) Effect of exchange rate fluctuations on the cash and cash equivalent balances (6,143) (12,484) 16,878 Change in cash and cash equivalents 1,498,586 (16,463) (55,820) Balance of cash and cash equivalents as at beginning of the period B 2,248,005 2,303,825 2,303,825 Balance of cash and cash equivalents as at end of the period C 3,746,591 2,287,362 2,248,005 *) Less than NIS thousand. The accompanying notes are an integral part of the condensed interim consolidated financial statements

11 Condensed Interim Consolidated Statements of Cash Flows (cont d) Migdal Insurance and Financial Holdings Ltd. For the three months ended For the year ended March 31 December Unaudited Audited Appendix NIS in thousands NIS in thousands Income for the period 91, , ,708 Items not involving cash flows: Company s share in net results of affiliates treated according to the equity value method (17,347) (13,148) (48,614) Income from financial investments for yield dependent insurance and investment contracts (2,220,615) (413,734) 1,896,543 Net income from other financial investments: Quoted debt assets (48,073) (71,136) (258,751) Unquoted debt assets (286,211) (428,356) (1,509,304) Shares (7,439) (32,894) 109,797 Other investments (19,737) (38,683) (375,160) Finance expenses in respect of financial liabilities and others 6,039 3,715 13,365 Profit from realization of: Intangible assets - - (2,901) Fixed assets (86) Affiliates - - (1,169) Change in fair value of investment property for yield dependent contracts - - (178,072) Change in fair value of other investment property - - (10,327) Depreciation and amortization: Fixed assets 12,244 12,132 50,159 Intangible assets 31,843 31, ,419 Change in liabilities for yield dependent insurance and investment contracts 2,989,955 *)1,230,617 1,519,584 Change in liabilities for non-yield dependent insurance and investment contracts 226,787 *)434,969 1,145,088 Change in share based payment transactions 1,337 3,680 7,351 Change in reinsurance assets 50,494 (62,257) (24,797) Change in deferred acquisition costs (31,870) (44,352) (83,762) Taxes on income 42,893 56, ,198 C/forward 730, ,614 2,585,561 *) Reclassified The accompanying notes are an integral part of the condensed interim consolidated financial statements

12 Condensed Interim Consolidated Statements of Cash Flows (cont d) Migdal Insurance and Financial Holdings Ltd. APPENDIX A CASH FLOWS FROM CURRENT ACTIVITIES BEFORE TAXES ON INCOME For the three months ended For the year ended March 31 December Unaudited Audited App NIS in thousands NIS in thousands B/forward 730, ,614 2,585,561 Changes in other balance sheet items: Financial investments and investment property for yield dependent insurance and investment contracts: Acquisition of investment property (220,474) (140,621) (437,287) Proceeds from sale of investment property ,366 Net acquisitions of financial investments 640,489 (741,530) (4,360,421) Financial investments and other investment property: Acquisition of investment property (30,426) (1,604) (133,095) Proceeds from sale of investment property Net acquisitions of financial investments (239,078) (15,598) (271,777) Outstanding premiums (153,836) (159,470) (14,010) Debtors and receivables 29,302 (36,503) (21,073) Creditors and payables (50,727) 127,291 35,249 Liabilities for employee benefits, net 444 8,513 27,412 Total adjustments required for presenting cash flows from current activities 706,163 (291,908) (2,555,075) Cash paid and received during the period for: Interest paid (3,381) (2,665) (17,443) Interest received 343, ,535 2,152,694 Taxes paid, net (45,368) (101,049) (192,292) Dividend received 104,422 70, ,530 Net cash provided by current activities 1,196, , ,122 (1) The cash flows from current activities include net acquisitions and sales of financial investments, mainly deriving from the activity in respect of insurance and investment contracts. The accompanying notes are an integral part of the condensed interim consolidated financial statements

13 Condensed Interim Consolidated Statements of Cash Flows Appendix B - Cash and cash equivalents as at the beginning of the period For the three months ended For the year ended March 31 December Unaudited Audited App NIS in thousands NIS in thousands Cash and cash equivalents for 750, , ,169 yield dependent contracts 1,497,706 1,408,656 1,408,656 Other cash and cash equivalents 2,248,005 2,303,825 2,303,825 Appendix C Cash and cash equivalent as at the end of the period Cash and cash equivalents for yield dependent contracts 2,498,106 1,033, ,299 Other cash and cash equivalents 1,248,485 1,254,143 1,497,706 3,746,591 2,287,362 2,248,005 Appendix D Cash used for acquisition of subsidiary consolidated for the first time Intangible assets (6,952) - (20,975) Fixed assets (58) - (90) Debtors and receivables (662) - (1,703) Other financial investments - - (1,151) Non-controlling interests Liabilities in respect of deferred taxes - - 1,672 Liabilities for employee benefits, net Creditors and payables 1,172-3,627 Financial liabilities - - 4,339 (6,397) - (14,071) Appendix E Significant activities not involving cash flows Acquisition of fixed assets and intangible assets against creditors 59,938 12,889 79,543 Dividend declared but not yet paid 150, ,000 - Dividend from affiliate declared but not received 5, The accompanying notes are an integral part of the condensed interim consolidated financial statements

14 Notes to the Condensed Interim Consolidated Financial Statements as at March 31, 2012 Note 1 - The Reported Entity Migdal Insurance and Financial Holdings Ltd. (hereunder - the Company ) is a company incorporated and residing in Israel and its formal address is No. 4 Ef al Str., Kiryat Aryeh, Petach Tikva The condensed consolidated financial statements of the Company as at March 31, 2012 include the statements of the Company, its subsidiaries (together referred to hereunder as the Group ) and investments in affiliates. The Company is controlled by Assicurazioni Generali S.p.A. (for information about the sale of the holdings in the Company, see Note 8.b). The Group operates primarily in the insurance, pension, provident funds and financial services lines of business. The Company s securities are listed for trade on the Tel Aviv Stock Exchange. Note 2 - Basis of Preparation of the Financial Statements A. Preparation of condensed consolidated interim financial statements These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements. They should be read in conjunction with the financial statements as at and for the year ended December 31, 2011 (hereinafter the annual financial statements ). Furthermore, these financial statements have been prepared in accordance with the disclosure requirements of the Law for Supervision of Financial Services (Insurance) 1981, and the provisions of Section D of the Securities Regulations (Periodic and Immediate Reports) 1970, to the extent these regulations apply to a corporation that consolidates an insurance company. B. Use of estimates and judgments The preparation of condensed financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The significant judgments made by management in applying the Group accounting policies and the principal assumptions used in making estimations involving uncertainty are consistent with those used for the preparation of the annual financial statements

15 Notes to the Condensed Interim Consolidated Financial Statements as at March 31, 2012 Note 3 - Significant Accounting Policies Except as described below in Item A, the accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its annual financial statements. A. Initial application of new standards IAS 12 Tax on income Amendment to IAS 12 Income Taxes, (hereunder the Amendment ), applies to investment property measured according to the fair value model. The Amendment provides that the measurement of the deferred tax asset/liability on the said assets is to be based on the presumption that the carrying amount of the investment property will be recovered fully through sale (and not usage). Nevertheless, if for example the investment property is depreciable and the objective of holding the asset according to the Company s business model is to recover substantially all the economic benefits inherent in the asset over its life through consumption and not sale, the Company must measure the deferred taxes according to the expected recovery method of the underlying asset. The amendment supersedes the provisions of SIC 21 that requires separation of the land component and the building component of investment property measured at fair value in order to calculate the deferred tax. Implementation of the Standard did not have a material effect on the Company's financial statements. B. Reclassification Amounts deposited with the Group in a defined benefit plan for Group's employees, the balance of which as at March 31, 2011 is NIS 42 million, were reclassified from the item liabilities in respect of non-yield dependent insurance contracts and investment contracts to the item liabilities in respect of yield dependent insurance contracts and investment contracts. The reclassifications had no effect on the equity, profit or loss and comprehensive income. C. Details of changes in the CPI and in the representative exchange rate of the U.S. dollar Representative CPI exchange Index for Last known rate of the the month index U.S. dollar % For the three months ended as at: March 31, (2.8) March 31, (1.9) For the year ended December 31, Note 4 - Seasonality A. Life and health insurance Revenues from life and health insurance premiums are not characterized as being seasonal. However, due to the fact that life assurance payments have tax benefits, a considerable part of the new sales are effected mainly at the end of the year

16 Notes to the Condensed Interim Consolidated Financial Statements as at March 31, 2012 Note 4 - Seasonality (cont d) B. General insurance The turnover from gross general insurance premiums are characterized as being seasonal, due mainly to the insurance of motor vehicles of various groups of employees and fleets of motor vehicles of businesses, for which the renewal dates are generally in January, as well as various policies for businesses, which are generally renewed in January or April. The effect of this seasonal characteristic on reported income is neutralized through the provision for unearned premium. In the components of other expenses, such as claims, and in components of other income, such as income from investments, there is no clear seasonality, and therefore, there is no clear seasonal impact on income. However, it is worth noting that a harsh winter could cause an increase in claims, mainly in the motor casco branch, in the first and fourth quarters of the year, and consequently, to a reduction in reported income. Note 5 - Segments Of Activity A. General The Group operates in the following segments of activity: 1. The segment of life assurance and long term savings The segment of life assurance and long term savings includes the lines of life assurance, pension and provident funds and it concentrates mainly on long term savings (in the framework of various types of insurance policies, pension and provident funds including educational fund), as well as insurance coverages for various risks such as: death, disability, disability income insurance, etc. According to the Regulator s directives the life assurance and long term savings segment is broken down into life assurance, pension and provident funds. 2. Health insurance segment The health insurance segment concentrates all the Group s activities in health insurance the segment includes long term care insurance, medical expense insurance, operations, transplants, dental insurance, etc. 3. General insurance segment The general insurance segment includes the liability and property branches. Under the Regulator of Insurance s directives, the general insurance segment is broken down into the lines of motor act, motor casco, other property branches, other liability branches. The motor act insurance line of insurance The motor act insurance line of business focuses on coverages acquisition of which by the owner of the vehicle or the driver is compulsory by law and it provides coverage for bodily injuries (to the driver of the vehicle, the passengers in the vehicle or to pedestrians), as a result of the use of the motor vehicle

17 Notes to the Condensed Interim Consolidated Financial Statements as at March 31, 2012 Note 5 - Segments Of Activity (cont d) A. General (cont d) The motor casco line of insurance The motor casco line of business focuses on the property damage coverage for the insured vehicle and property damages that the insured vehicle will cause to a third party. Other liability branches The liability branches are intended for the coverage of the policyholders liabilities for any damage that he will cause to a third party. These lines of business include: third party liability, employers liability, professional liability, product warranty, marine hull and aviation hull. Property and other branches The other general insurance branches that are not vehicles and liabilities, including property loss, comprehensive business premises, comprehensive residential, mortgage banks, personal accidents, cargo in transit, engineering insurance and other risks. 4. Financial services segment This segment mainly includes financial assets management services and marketing for investments (mainly management of mutual funds and portfolio management), stock exchange brokerage in regulated markets, underwriting services, market making of various securities as well as other services. 5. Other segments of activity include mainly activities of insurance agencies

18 Note 5 Segments of Activity (cont d) B. Reportable segments (cont d) For the period of three months ended as at March 31, 2012 Life Not assurance Other attributed Adjustments and long General Financial business to business and term savings Health insurance services segments segments offsets Total Unaudited NIS in thousands Gross premiums earned 1,803, , , ,333,946 Premiums earned by reinsurers 43,465 16, , ,349 Premiums earned on retention 1,759, , , ,160,597 Net investment income (losses) and finance income 2,544,855 53,445 29,796 6,600 1,209 23,028 ( 13,600 ) 2,645,333 Income from management fees 198, , ( 1,590 ) 231,661 Income from commissions 16,817 2,934 10,419 12,222 90,110 - (* ( 44,169 ) 88,333 Other income ,349-1,502-2,851 Total income 4,519, , ,726 55,134 91,319 24,530 ( 59,359 ) 5,128,775 Payments and change in liabilities in respect of insurance and investment contracts, gross 4,114, , , ,473,039 Reinsurers share in payments and in change in liabilities in respect of insurance contracts 21,067 7,989 38, ,327 Payments and change in liabilities in respect of insurance and investment contracts on retention 4,093, , , ,405,712 Commissions, marketing expenses and other acquisition expenses 212,205 40,309 76,230 17,047 42,227 - ( 44,984 ) 343,034 Administrative and general expenses 140,209 10,757 9,442 32,348 49,004 13,258 ( 2,393 ) 252,625 Other expenses 3, ,216 1,060-7,213 Finance expenses 6,194 - ( 3,714 ) ( 4 ) ,697 ( 12,799 ) 3,248 Total expenses 4,455, , ,768 49,835 94,321 27,015 ( 60,176 ) 5,011,832 Share in investee profits treated according to the equity value method 9,934-2, ,542-17,347 Income (loss) before taxes on income 74,113 22,177 32,755 5,299 ( 2,928 ) 2, ,290 Other comprehensive income before tax benefit 66,395 2,954 36, , ,120 Total comprehensive income (loss) for the period before taxes on income 140,508 25,131 69,702 5,299 ( 2,345 ) 31, ,410 Liabilities in respect of yield dependent insurance and investment contracts 53,250,655 1,127, ,378,097 Liabilities in respect of non-yield dependent insurance and investment contracts 23,263, ,581 3,914, ,504,780 *) Derived from income from commissions received from agencies owned by the Group, from activities in the life assurance area and long term savings in the amount of NIS 34,082 thousand, in the health area in the amount of NIS 2,313 thousand and in the general insurance area in the amount of NIS 7,774 thousand

19 Note 5 Segments of Activity (cont d) B. Reportable segments (cont d) For the period of three months ended as at March 31, 2011 Life Not assurance Other attributed Adjustments and long General Financial business to business and term savings Health insurance services segments segments offsets Total Unaudited NIS in thousands Gross premiums earned 1,693, , , ,201,749 Premiums earned by reinsurers 46,829 15, , ,229 Premiums earned on retention 1,646, , , ,033,520 Net investment income (losses) and finance income 932,842 16,818 65,099 3,371 1,194 39,437 ( 3,235 ) 1,055,526 Income from management fees 190, , ( 2,900 ) 237,262 Income from commissions 13,596 4,901 13,368 13,850 94,042 - ** (49,113 ) 90,644 Other income , ,111 Total income 2,783, , ,831 68,707 95,236 39,437 ( 55,248 ) 3,419,063 Payments and change in liabilities in respect of insurance and investment contracts, gross 2,408, , , ,837,778 Reinsurers share in payments and in change in liabilities in respect of insurance contracts 20,274 10, , ,533 Payments and change in liabilities in respect of insurance and investment contracts on retention 2,388,414 93, , ,705,245 Commissions, marketing expenses and other acquisition expenses 193,057 32,149 73,838 22,011 40,278 - ( 47,461 ) 313,872 Administrative and general expenses 126,433 8,052 9,675 34,816 47,341 9,931 ( 2,900 ) 233,348 Other expenses 3, , ,209 Finance expenses 2,589 - ( 1,210 ) ( 189 ) 700 4,205 ( 3,235 ) 2,860 Total expenses 2,713, , ,020 57,288 91,422 14,136 ( 53,596 ) 3,262,534 Share in investee profits (losses) treated according to the equity value method 7,506-2,408 - ( 141 ) 3,375-13,148 Income before taxes on income 77,133 20,209 30,219 11,419 3,673 28,676 ( 1,652 ) 169,677 Other comprehensive income (loss) before tax benefit 7,504 3,346 ( 36,983 ) - ( 728 ) ( 29,157 ) - (56,018 ) Total comprehensive income (loss) for the period before taxes on income 84,637 23,555 ( 6,764 ) 11,419 2,945 ( 481 ) ( 1,652 ) 113,659 Liabilities in respect of yield dependent insurance and investment contracts *50,090,159 1,009, ,099,175 Liabilities in respect of non-yield dependent insurance and investment contracts *22,329, ,625 3,951, ,567,874 * Reclassified, see Note 3B. ** Derived from income from commission received from agencies owned by the Group, from activities in life assurance area and long term saving in the amount of NIS 40,895 thousand in the health area in the amount of NIS 2,193 thousand and in the general insurance area in the amount of NIS 6,025 thousand

20 Note 5 Segments of Activity (cont d) B. Reportable segments (cont d) For the year ended as at December 31, 2011 Life assurance Not and long Other attributed Adjustments term General Financial business to business and savings Health insurance services segments segments offsets Total Audited NIS in thousands Gross premiums earned 6,846, ,906 1,430, ,892,089 Premiums earned by reinsurers 179,274 62, , ,034 Premiums earned on retention 6,667, , , ,173,055 Net investment income and finance income 398, ,378 14,656 3, ,706 ( 27,682 ) 661,050 Income from management fees 746, , ( 6,577 ) 905,958 Income from commissions 82,577 19,144 52,989 50, ,140 - (* ( 201,498 ) 379,916 Other income 1, ,814 3,508 1,579 ( 1,815 ) 9,255 Total income 7,896, ,528 1,172, , , ,285 ( 237,572 ) 10,129,234 Payments and change in liabilities in respect of insurance and investment contracts, gross 6,248, ,222 1,104, ,747,124 Reinsurers share in payments and in change in liabilities in respect of insurance contracts 56,042 33, , ,165 Payments and change in liabilities in respect of insurance and investment contracts on retention 6,192, , , ,379,959 Commissions, marketing expenses and other acquisition expenses 764, , ,812 76, ,832 - ( 195,629 ) 1,264,223 Administrative and general expenses 538,459 37,609 38, , ,637 35,094 ( 6,577 ) 971,849 Other expenses 14, Finance expenses 7,800-14,604 2,363 9,306 1,079-26, ,791 27,408 ( 27,682 ) 25,152 Total expenses 7,517, ,500 1,195, , ,566 63,581 ( 229,888 ) 9,667,942 Share in investee profits (losses) treated according to the equity value method 27,303-7,672 - ( 225 ) 13,864-48,614 Income (loss) before taxes on income 406,897 37,028 ( 15,273 ) 19,580 12,790 56,568 ( 7,684 ) 509,906 Other comprehensive loss before taxes on income 263,681 ) ( ( 9,404 ) ( 80,306) - ( 974 ) ( 26,647 ) - (381,012 ) Total comprehensive income (loss) for the period before taxes on income 143,216 27,624 ( 95,579 ) 19,580 11,816 29,921 ( 7,684 ) 128,894 Liabilities in respect of yield dependent insurance and investment contracts 50,316,643 1,071, ,388,142 Liabilities in respect of non-yield dependent insurance and investment contracts 23,093, ,812 3,866, ,277,993 *) Derived from income from commissions received from agencies owned by the Group, from activities in the life assurance area and long term savings in the amount of NIS 169,854 thousand, in the health area in the amount of NIS 10,217 thousand and in the general insurance area in the amount of NIS 21,427 thousand

21 Note 5 Segments of Activity (cont d) C. Additional information regarding the life assurance and long term savings segment Three month period ended as at March 31, 2012 Life assurance Pension funds Provident funds Total Unaudited NIS in thousands Gross premiums earned 1,803, ,803,362 Premiums earned by reinsurers 43, ,465 Premiums earned on retention 1,759, ,759,897 Net investment income and finance income 2,544, ,544,855 Income from management fees 94,556 68,501 35, ,288 Income from commissions 16, ,817 Total income 4,415,289 69,239 35,329 4,519,857 Payments and change in liabilities for insurance and investment contracts, gross 4,114, ,114,644 Reinsurers share in payments and in change in liabilities for insurance contracts 21, ,067 Payments and change in liabilities for insurance and investment contracts on retention 4,093, ,093,577 Commissions, marketing expenses and other acquisition expenses 172,618 27,494 12, ,205 Administrative and general expenses 100,105 26,221 13, ,209 Other expenses - - 3,493 3,493 Finance expenses 5, ,194 Total expenses 4,372,019 53,715 29,944 4,455,678 The Group s share in profits of investees treated according to the equity value method 9, ,934 Income before taxes on income 53,204 15,524 5,385 74,113 Other comprehensive income before taxes on income 63,878 2, ,395 Total comprehensive income for the period before taxes on income 117,082 17,746 5, ,

22 Note 5 Segments of Activity (cont d) C. Additional information regarding the life assurance and long term savings segment (cont d) Three month period ended as at March 31, 2011 Life assurance Pension funds Provident funds Total Unaudited NIS in thousands Gross premiums earned 1,693, ,693,180 Premiums earned by reinsurers 46, ,829 Premiums earned on retention 1,646, ,646,351 Net investment income and finance income 930,962 1, ,842 Income from management fees 91,394 62,128 37, ,787 Income from commission 13, ,596 Total income 2,682,303 63,791 37,482 2,783,576 Payments and change in liabilities for insurance and investment contracts, gross 2,408, ,408,688 Reinsurers share in payments and in change in liabilities for insurance contracts 20, ,274 Payments and change in liabilities for insurance and investment contracts on retention 2,388, ,388,414 Commissions, marketing expenses and other acquisition expenses 160,574 21,344 11, ,057 Administrative and general expenses 91,890 21,306 13, ,433 Other expenses - - 3,456 3,456 Finance expenses 1,129-1,460 2,589 Total expenses 2,642,007 42,650 29,292 2,713,949 The Group s share in profits of investees treated according to the equity value method 7, ,506 Income before taxes on income 47,802 21,141 8,190 77,133 Other comprehensive income (loss) before taxes on income 9,512 ( 1,902) ( 106) 7,504 Total comprehensive income for the period before taxes on income 57,314 19,239 8,084 84,

23 Note 5 Segments of Activity (cont d) C. Additional information regarding the life assurance and long term savings segment (cont d) Year ended as at December 31, 2011 Life assurance Pension funds Provident funds Total Audited NIS in thousands Gross premiums earned 6,846, ,846,689 Premiums earned by reinsurers 179, ,274 Premiums earned on retention 6,667, ,667,415 Net investment income and finance income 393,351 4, ,731 Income from management fees 351, , , ,716 Income from commission 82, ,577 Other income 1, ,169 Total income 7,496, , ,704 7,896,608 Payments and change in liabilities for insurance and investment contracts, gross 6,248, ,248,161 Reinsurers share in payments and in change in liabilities for insurance contracts 56, ,042 Payments and change in liabilities for insurance and investment contracts on retention 6,192, ,192,119 Commissions, marketing expenses and other acquisition expenses 633,738 89,530 41, ,625 Administrative and general expenses 376,835 99,458 62, ,459 Other expenses ,011 14,011 Finance expenses 3,039-4,761 7,800 Total expenses 7,205, , ,295 7,517,014 The Group s share in profits of investees treated according to the equity value method 27, ,303 Income before taxes on income 317,584 67,904 21, ,897 Other comprehensive loss before taxes on income ( 261,410) ( 1,976) ( 295) (263,681) Total comprehensive income for the period before taxes on income 56,174 65,928 21, ,

24 Note 5 Segments of Activity (cont d) D. Additional information regarding the general insurance segment Three month period ended March 31, 2012 Property and Other Motor Motor other liability act casco branches *) branches *) Total Unaudited NIS in thousands Gross premiums 100, , , , ,394 Reinsurance premiums 1, ,598 12, ,844 Premiums on retention 98, ,005 51,957 91, ,550 Change in unearned premium balance, on retention ( 24,221) ( 35,447) ( 7,317) ( 47,054) (114,039) Earned premium on retention 74,745 86,558 44,640 44, ,511 Investment income, net and finance income 15,250 2,220 1,099 11,227 29,796 Income from commission - - 6,913 3,506 10,419 Total income 89,995 88,778 52,652 59, ,726 Payments and change in liabilities for insurance contracts, gross 53,551 66,941 48,941 47, ,081 Reinsurers share in payments and in change in liabilities for insurance contracts ( 5,796) 7 35,352 8,708 38,271 Payments and change in liabilities for insurance contracts on retention 59,347 66,934 13,589 38, ,810 Commission, marketing expenses and other acquisition expenses 8,170 21,566 34,854 11,640 76,230 Administrative and general expenses 2,573 1,786 3,458 1,625 9,442 Finance expenses ( 3,899) 105 (3,714) Total expenses 70,148 90,308 48,002 52, ,768 Share in profits of investees treated according to the equity value method 1, ,054 2,797 Income (loss) before taxes on income 21,279 ( 1,322) 4,753 8,045 32,755 Other comprehensive income before taxes on income 18,910 2,752 1,363 13,922 36,947 Total comprehensive income for the period before taxes on income 40,189 1,430 6,116 21,967 69,702 Liabilities in respect of insurance contracts, gross as at March 31, ,478, , ,628 1,530,669 3,914,449 *) Property and other branches mainly include the results of comprehensive residential, comprehensive business premises and engineering insurance branches whose activities constitute about 88% of the total premiums in these branches. Other liability branches mainly include the results of employers' liability, third party and professional liability insurance branches whose activities constitute about 73% of the total premiums in these branches

25 Note 5 Segments of Activity (cont d) D. Additional information regarding the general insurance segment (cont d) Three month period ended March 31, 2011 Property and Other Motor Motor other liability act casco branches *) branches *) Total Unaudited NIS in thousands Gross premiums 97, , , , ,128 Reinsurance premiums 1, ,124 13, ,247 Premiums on retention 96, ,982 55,590 91, ,881 Change in unearned premium balance, on retention ( 19,124) ( 48,751) ( 8,775) ( 49,867) (126,517) Earned premium on retention 77,377 89,231 46,815 41, ,364 Investment income, net and finance income 34,532 5,016 1,225 24,326 65,099 Income from commission ,138 3,230 13,368 Total income 111,909 94,247 58,178 69, ,831 Payments and change in liabilities for insurance contracts, gross 78,167 76, ,038 68, ,845 Reinsurers share in payments and in change in liabilities for insurance contracts ( 606) 33 89,427 13, ,128 Payments and change in liabilities for insurance contracts on retention 78,773 76,172 13,611 55, ,717 Commission, marketing expenses and other acquisition expenses 8,206 19,693 36,455 9,484 73,838 Administrative and general expenses 2,784 1,675 3,484 1,732 9,675 Finance expenses ( 1,427) 75 (1,210) Total expenses 89,888 97,557 52,123 66, ,020 Share in profits of investees treated according to the equity value method 1, ,408 Income (loss) before taxes on income 23,271 ( 3,129) 6,151 3,926 30,219 Other comprehensive income (loss) before taxes on income ( 19,190) ( 2,788) ( 1,479) ( 13,526) (36,983) Total comprehensive income (loss) for the period before taxes on income 4,081 ( 5,917) 4,672 ( 9,600) (6,764) Liabilities in respect of insurance contracts, gross as at March 31, ,483, , ,745 1,524,095 3,951,519 *) Property and other branches mainly include the results of comprehensive residential, comprehensive business premises, cargo in transit and personal accidents insurance branches whose activities constitute about 88% of the total premiums in these branches. Other liability branches mainly include the results of third party liability insurance and professional liability insurance branches whose activities constitute about 92% of the total premiums in these branches

26 Note 5 Segments of Activity (cont d) D. Additional information regarding the general insurance segment (cont d) Year ended December 31, 2011 Property and Other Motor Motor other liability act casco branches *) branches *) Total Audited NIS in thousands Gross premiums 258, , , ,488 1,446,169 Reinsurance premiums 5, ,674 87, ,339 Premiums on retention 253, , , , ,830 Change in unearned premium balance, on retention 3,222 ( 2,325) ( 5,530) ( 3,613) (8,246) Earned premium on retention 256, , , , ,584 Investment income, net and finance income 82,069 8,819 18,538 56, ,378 Income from commission ,633 8,342 52,989 Total income 338, , , ,504 1,172,951 Payments and change in liabilities for insurance contracts, gross 233, , , ,318 1,104,741 Reinsurers share in payments and in change in liabilities for insurance contracts ( 6,746) ,143 ( 14,940) 277,498 Payments and change in liabilities for insurance contracts on retention 240, ,535 53, , ,243 Commission, marketing expenses and other 33,812 96, ,582 48, ,812 acquisition expenses Administrative and general expenses 11,222 8,013 12,977 6,025 38,237 Finance expenses , ,604 Total expenses 285, , , ,203 1,195,896 Share in profits of investees treated according to the equity value method 4, ,855 7,672 Income (loss) before taxes on income 56,576 ( 45,238) 1,233 ( 27,844) (15,273) Other comprehensive loss before taxes on income ( 43,040) ( 4,619) ( 2,763) ( 29,884) (80,306) Total comprehensive income (loss) for the period before taxes on income 13,536 ( 49,857) ( 1,530) ( 57,728) (95,579) Liabilities in respect of gross insurance contracts as at December 31, ,456, , ,363 1,490,084 3,866,447 *) Property and other branches mainly include the results of comprehensive residential, comprehensive business premises and engineering insurance branches whose activities constitute about 87% of the total premiums in these branches. Other liability branches mainly include the results of employers liability, third party, professional liability and product warranty insurance branches whose activities constitute about 84% of the total premiums in these branches

27 Note 6 - Management and Requirements in the Group Companies 1. Management s policy is to maintain a strong capital base in order to preserve the Company s ability to continue its operations in order to generate returns for its shareholders and in order to support future business activities. The subsidiaries of the Company which are institutional entities, are subject to capital requirements laid down by the Regulator of Insurance. In August 2011, the Board of Directors of Migdal Insurance adopted a policy for management of the shareholders equity of Migdal Insurance. Pursuant to the policy, as stated, it was resolved, among other things, that Migdal Insurance will strive to maintain existing capital in accordance with the capital requirements, which will not be less than 110% of the capital required based on the capital requirement regulations. In addition, monitoring and reporting procedures were determined with respect to the capital developments, as well as timetables for performance and completion of activities relating to the capital position of Migdal Insurance. It is clarified that the above policy does not constitute a determination of mandatory capital, and there is no certainty that Migdal Insurance will comply with this target at all times. In addition to the general requirements in the Company s Law, the distribution of dividends from surplus capital in insurance companies is also subject to liquidity requirements and compliance with investment regulations. The information relating to capital requirements should be read together with disclosure provided in Note 7F of the annual financial statements